CPAY vs. V: Which Stock Is the Better Value Option?

Investors interested in Financial Transaction Services stocks are likely familiar with Corpay (CPAY) and Visa (V). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Corpay has a Zacks Rank of #2 (Buy), while Visa has a Zacks Rank of #3 (Hold) right now. This means that CPAY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

CPAY currently has a forward P/E ratio of 12.77, while V has a forward P/E of 24.54. We also note that CPAY has a PEG ratio of 0.89. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. V currently has a PEG ratio of 1.80.

Another notable valuation metric for CPAY is its P/B ratio of 5.92. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, V has a P/B of 14.96.

These are just a few of the metrics contributing to CPAY's Value grade of B and V's Value grade of C.

CPAY sticks out from V in both our Zacks Rank and Style Scores models, so value investors will likely feel that CPAY is the better option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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